A federal bankruptcy judge rejected a request by attorneys for creditors of Triad America Corp. to have assets from Newedge Oil Co., the only profitable subsidiary owned by Saudi billionaire Adnan Khashoggi, consolidated into the bankruptcy filing.
A herd of nearly three dozen lawyers crowded into U.S. Bankruptcy Judge John H. Allen's courtroom Friday to add their two cents' worth of argument on the issue.Attorneys for Triad America trustee, R. Todd Neilson, wanted all the bankruptcy filings of subsidiaries combined into one case to allow the assets of the California oil company to be used for paying off creditors of the holding firm.
Triad America, the holding firm for 11 companies controlled by Khashoggi and his two brothers, filed for bankruptcy in January 1987 to protect itself from creditors owed an estimated $250 million.
Khashoggi, once considered the richest man in the world, has recently experienced financial problems as the result of depressed oil and real estate prices.
Newedge, the parent company of Southern California-based Edgington Oil, was termed the "crown jewel" of Khashoggi's holdings.
U.S. Bankruptcy Judge Calvin Ashland, for the Central District of California, ruled Thursday that an earlier stay granted Newedge was still in effect and Triad could not absorb the firm's assets.
Ashland also ruled he had the right to hear the Newedge bankruptcy case rather than transfer the case to Utah as was done with other Triad subsidiaries.
Triad America, based in Salt Lake City, at one time owned the Salt Lake International Center west of the airport, the downtown Sheraton Hotel and the Triad Center.
Al Smith, a Los Angeles lawyer representing Newedge, told the judge that the California bankruptcy court had already ruled on the stay preventing Triad from assuming assets of the oil firm and on the jurisdictional dispute.
Attorneys also pointed out that the California judge ruled the consolidation would also affect the value of Edgington stock and the property value of Newedge.
But Richard Pachulski, a lawyer representing the Triad trustee, said, "We are not looking to impinge on Newedge. We are looking to get the money," from the firm to pay off all creditors of the parent corporation.
But Clark declined the request, saying, "California has exclusive jurisdiction over assets of Newedge, including Edgington Oil."
A hearing to consolidate the bankruptcy filings was postponed.
Clark also delayed ruling on a request for payment from attorneys representing Triad, the creditors committee and subsidiaries, who lawyers estimated are owed more than $1.25 million in fees.